What A Trucker Should Do to Mitigate Refrigeration Cargo Claims Before They Happen and Dealing with Truck Brokers

From Big Truck TV- Hank Seaton

I have gotten to be a fan of Big Truck TV and they bring up items from time to time with issues that relate to trucking insurance. Noted transportation attorney Hank Seaton has given a great analysis of what a trucker should do in his negotations with brokers and shippers relative to mitigating refrigeration breakdown claims per the dialogue below:

"How can we protect a trucker's interests when we’re dealing with brokers ( note this is relative to all truckers- not just reefer accounts)

There are really several things that a carrier should do and a lot of them relate to establishing business practices in a rules tariff. One of the items is to put into your rules circular that you will maintain constant temperature as required by the Bill of Lading in Transit and that your recorder off of the truck will be prima facia evidence that the temperature has been maintained because otherwise if the shipment gets to destination and it’s out of temperature, there’s going to be a presumption that you’re the one that damaged it in transit. However, if you have in your rules tariff that no, if we have a recorder that shows we maintained temperature, then it overcomes that presumption.
A second item – and I do think this is of utmost importance – is that truckload carriers limit their liability by tariff to the extent of their insurance. You’ll need to tell your shipper up front in the contract that your maximum limit for cargo loss or damage is $X and if the value of the shipment is higher than that, you’ll go out and buy additional insurance for that particular shipment but you will want to negotiate a special rate to cover the cost of the additional insurance.

Are there any little tricks a trucker should know about when dealing with refrigerated product?

In the refrigerated area there are some particular tricks of the trade you should be made aware of. Number one, does the trailer need to be pre-chilled because a reefer only maintains temperature, it’s not capable of lowering the temperature. If you go in with a reefer that has an ambient temperature of 90 degrees and you put refrigerated product in it, you’re going to have a problem – you need to pre-chill the trailer before loading the product. Recording the temperature on the load confirmation sheet, recording the nature of the product, knowing the susceptibility of the product to temperature damage are all very important issues.


What’s the deal with offsets and why is it important that our broker doesn’t use them?

A very important issue when dealing with a broker is the dreaded off-set. Often times a broker will tell the shipper, “Don’t worry about cargo claims because I’ll take care of them for you. I’ll accept responsibility for the cargo claims.” But the way the broker accepts that responsibility is to say, “You’re right Mr. Shipper, you’re owed the money, I’ll just take it out of the carrier’s receivables.” That’s called an off-set and it’s very important that a motor carrier get a broker to agree to pay the freight charges and to litigate the cargo claim, and not simply off-set them. Far too many small refrigerated carriers are run out of business by the off-set. If they’re factoring their receivables, they’re pledging to the factor that that receivable is due, owing and uncontested and then all of a sudden the factor gets a notice declaring the shipper isn’t paying that $120,000, they have a cargo claim – at that point, the factor says his client is damaged goods, and he basically owns and forecloses on him. So that is really a spiral of death and the off-set is something that you really need to address up front.

As far as protecting a trucker, what should we be aware of when dealing with new brokers?

Some of the things that you should do when dealing with brokers are, number one, check out their bona fides, see how long they’ve been in business, see how they pay their freight charges, and use a credit referencing service to determine their viability. Number two, do not surrender recourse to the shipper; there will be a tendency on the part of the broker to say, “Look only to me for payment of the freight charges.” You want to take the position that the broker is the agent of the shipper and that you can ultimately go to the shipper for payment. Number three, see how they deal with the offset. Provide that Carmack governs; it’s not a question of indemnity, it’s not a question of they can pay any claim they want to and take it out of your hide – you have a right to be involved in the mitigation of the loss. Those are the three major issues when dealing with brokers."